Manufacturing stabilises in June on record gain in new orders

Thursday 16th July 2009

New Zealand manufacturing activity shrank at a slower pace in June as a record jump in new orders entered growth territory for the first time since April last year.

Manufacturing rose 3.1 points to 46.2, according to the Bank of New Zealand-Business NZ Performance of Manufacturing Index. The value was higher than the 45 recorded last June, but lower than the same period in previous years.

New orders, the only sub-index to grow in the period, jumped a record 10.6 points to 52.2 in its strongest reading since February 2008. The other four sub-indices continued to contract, but the tail-off in finished stocks indicated manufacturers were running down stocks and clearing the way to re-link supply to consumer demand, according to bank economist Craig Ebert.

"A pick-up in orders would certainly gel with improving signs globally," Ebert said. "The bigger news in June's PMI was that production might well be beginning to stabilise, even recover a bit relatively soon, if increasing orders and culled inventories are any guide."

Manufacturing in New Zealand and Australia has benefited from a pick-up in Chinese demand for raw materials, as the world's fourth largest economy continues to exceed growth expectations.

China's economy grew 7.1% in the first six months of this year, the Beijing Times reported. The government will release the official statistics today.

China is New Zealand's fourth largest export destination, accounting for some 7.5% of the nation's $43.4 billion sales.

Metal products manufacturing fell to 37.8 on the PMI after registering three consecutive months above. Aluminium, steel and iron exports make up around 5.1% of the nation's exports.

New Zealand's annual rate of inflation dropped back close to middle of the central bank's target band recording a 1.9% increase for the year ended June 30 today, according to Statistics New Zealand.

The consumer price index rose 0.6% in the second quarter, matching economists' forecasts.

Businesswire.co.nz

Comments from our readers

No comments yet